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Day of liquidation: who ignited the powder keg of Web3 world

Time : 19/01/2022 Author : h7c92u Click : + -
        In his view, cryptocurrency is strikingly similar to the subprime mortgage crisis 15 years ago: before 2007, many Americans who were originally marginal had the opportunity to increase leverage crazily. With the arrival of the real estate foam, these people who take chances have become the fuse. Nowadays, the risk of cryptocurrency is also disproportionately falling on those who do not know what they are doing and cannot cope with the risk [9]. The young people who speculated in money, while laughing at Mr. Paul who dropped his schoolbag as an antique, followed the "super cycle" of the encrypted world advocated by the mysterious Pinyin man zhusu. This 35 year old, who was born in China and immigrated to the United States at the age of 6, founded hedge fund Sanjian capital, and became one of the three mountains pressing in front of Web3 venture capitalists on his own.
 
        The other two, one is in the field of leading layout encryption for nearly 10 years, almost every star project has its a16z behind it; The other is Sequoia, which believes in working hard to achieve miracles and expanding at an average rate of one company per week in the first half of 2022. Zhusu and his three arrow capital, just like every version of the investment game must have a man of the moment from a rash background, began their own road to fame with brutal joy. At the end of the last encryption bear market, Sanjian capital confidently bet on bitcoin and Ethereum, and became famous as the market turned bull. Later, Sanjian capital also participated in the early investment of star blockchain projects such as Solana and axieinfinity.
 
        According to the calculation of Nansen, a blockchain analysis company, among the assets managed by Sanjian capital, encryption assets alone are close to $10 billion. The rise path of Sanjian capital is the middle of the line month of "one day in the currency circle, one year in the world". Sanjian capital was exposed to be facing a liquidity crisis and insolvent; Half a month later, the court received an application for bankruptcy protection. The once flag of the currency circle has become the "strongest water devil" in an instant: a number of affiliated enterprises have also been dragged into the water, and business difficulties have been reported. In a blink of an eye, the building rises and falls. This hedge fund, which rose in 2018, was born in front of the millennial generation and performed 2008 again. On December 21st, 2018, a Singaporean Chinese named zhusu posted a highly controversial tweet &mdash& mdash; "We will rush out of the (encrypted) bear market soon, leaving other traditional investors trapped in fiat money [2].
 
        ”。 On this day, the price of bitcoin was about $3850, down more than 80% from the previous bull market. Three years later, this figure rose to $69020, nearly 18 times. Just like every gambler who yells right at the bottom, zhusu can become famous as long as he yells right once, even if he is not a devout crypto believer at all. In 2012, zhusu and his classmate kyledavies lost a lot of gambling money around bitcoin, so they turned around and did what they should do [3]. Zhusu, who was still working at Credit Suisse at that time, preferred the arbitrage strategy of "zero capital and ten thousand interest" during working hours: they found that the inefficient NDF market overseas earned income through subtle differences in foreign exchange quotations between different banks.
 
        By the end of the year, zhusu, who had completed the original accumulation of capital, resigned smartly, founded Sanjian capital together with Kyle, and went further and further on the road of "middlemen earn price differences". In the peak years, Sanjian capital once accounted for 8% of the foreign exchange trading volume of global emerging markets [4]. As a trader with a keen sense of smell, zhusu still kept his eyes on the encryption market. Finally, at the end of the 2018 bear market, he smelled the smell of oil and water &mdash& mdash; He found that compared with the slightly aging foreign exchange transactions, the talent siphoning ability of the encryption industry is rising rapidly. Perhaps deeply convinced that traditional finance is "too conservative to win", the two founders of Sanjian capital began to move to the field of encryption in an all-round way.
 
        In 2020, there was a flash crash in the entire encryption market for several hours, and the link token released by a popular blockchain project fell from $14 to $12. Taking advantage of this gap, Sanjian capital purchased link tokens worth $10 million within one hour. That night, the entire encryption market rebounded. Zhusu also personally went short in the market. In November 2021, he tweeted that the founders of Ethereum "have forgotten their original ideals", and vigorously attacked Ethereum's expensive handling fees. Half a month later, they were found to have secretly bought about 100000 ether coins. Speaking of it, although zhusu was born in China, he did not follow the path of "making a fortune in silence".
 
        He obviously enjoys being an online celebrity in an encrypted community &mdash& mdash; Bask in your abs, do podcasts, connect with celebrities live, and be familiar with the flow password that doesn't surprise you. Similar to the statement that "gold will be cruelly monetized, and your descendants will think that gold panning is a person who picks up metal fragments in the dustbin and sells money", I'm afraid Zhao CHANGPENG will shake his head after reading it, but he has brought zhusu more than 500000 twitter subscriptions. In recent years, he has been promoting his original "super cycle" theory to the outside world. In short, he believes that as long as enough institutional funds enter the market, there will be no bear market in the encryption market as in the past.
 
        Even short-term fluctuations will be much milder than in the past. Ningbo death squads were afraid of this elegant statement of carrying sedan chairs. Another of his encrypted investment ideas is "reducing investment diversification" &mdash& mdash; Because the return on investment of most projects is far lower than that of a few mainstream cryptocurrencies. Translated into A-share language, only buy Baijiu in coin and Maotai in liquor. Zhusu, the "Internet celebrity". People who dare to do so generally have high self-confidence, whether they are original theories or concentrated bets. Obviously, the successful prediction of the potential of bitcoin and Ethereum, as well as a new round of encryption bull market, gave zhusu great confidence in the road.
 
        But in the investment community, the saying that failure is the mother of success is often said the opposite &mdash& mdash; Success is often the mother of failure. The methodology that used to be successful is now sliding into the abyss with three arrows of capital. At the end of 2021, zhusu, who has been canonized by crypto believers, confidently predicted the price of bitcoin in two months &mdash& mdash; At $88888, the coin ring ponies were all cheering. Zhusu himself did not forget that while stepping on Ethereum, allin virtual currency new camp &mdash& mdash; Terra public chain.
 
        But this time he miscalculated. In the volatile encryption market, the backhand is rewarded with a bottom dive. After the high of $69020, bitcoin has fallen a thousand miles, and its market value has shrunk by more than 70%. Terra was born in 2018 and is famous for its unique dual token economic system: the price of Luna, the project currency, fluctuates with the market and is linked to the stability currency UST, which is directly linked to the US dollar. Before May 2022, the price of a single ust has always remained around $1, and there has never been a serious breakaway. This keeps ust in the top 3 of the global stable currency market all year round, and ranks in the top 10 of the entire encryption market.
 
        The mechanism of ust is different from other stable currency items on the market: when the traditional issuer ICO, every additional stable currency will be deposited into the account as an asset anchor; However, Terra does not have an anchor, but relies on the algorithm to artificially stabilize the value of ust around $1 by destroying tokens and other means. This kind of play that makes those traditional investors in the secondary market still confused after listening to it has long been pursued by crypto KOL, and zhusu calls it "a necessary part of the next super cycle [6]". Sanjian capital also made a heavy bet on terra: US $560million was exposed by the media alone.
 
        There is a cryptocurrency lending agreement called anchor on Terra's public chain, which quickly became popular because it promised an ultra-high annual yield of 19.5%. When the cryptocurrency market turns from bull to bear in 2022, this is also regarded by many investors as almost the only way to obtain stable income. He immediately borrowed money everywhere under the signboard of three arrow capital. As long as the loan interest of other institutions was less than 19.5%, zhusu converted all the borrowed money into ust tokens and deposited it in the "cryptobank" anchor. After finishing this math problem at the preschool level in Haidian District, zhusu and Sanjian capital can directly lie down and harvest the price difference.
 
        Zhusu, who is full of money, didn't expect that anchor left a bunch of coquettish operations behind and directly went bankrupt. Sanjian has not yet become a middleman to earn the price difference, so he first traded for the red code. Like zhusu, coin circle sharks who smell arbitrage opportunities will not foolishly borrow money from anchor. Everyone is comparing prices all over the market, looking for lower loan interest. Anchor, who thought he could absorb deposits and loans through high yields, was caught in the neck by his high loan interest rate, and the borrowing rate was less than 30% all year round. Anchor can't provide high yield just by bleeding, and can't release enough loans, so they came up with a very "Web3" solution &mdash& mdash; In case of trouble, you must issue money first.
 
        Any user who borrows from anchor will receive the newly launched "gift" token ANC. The beauty of this move is that it directly attracts a group of ruthless people who are not interested in deposits but are interested in frying ANC tokens &mdash& mdash; I borrowed your money from ANC. Any deposit income of 19.5% is not as good as "gifts". Everyone wants to make money out of thin air: borrowers bet that the ANC token rose sharply, anchor bet that the loan amount soared, zhusu bet that anchor could pay interest stably, while other borrowers bet that Sanjian capital could earn more money.
 
        Unfortunately, the ANC token did not become the straw, and anchor has been in a state of loss. As long as the first Retreater appears in the fragile ecosystem, prosperity will end. ANC token price trend in recent three months, data source: Qian an. In May, some "large depositors" began to cash out and leave the market. Investors who smell the crisis have followed the trend to withdraw and sell. Affected by extreme panic, the stable currency ust broke off its anchor for the first time in history and began to plummet. As for Luna linked to UST, the price fell from $100 to close to zero. The UST token under Terra algorithm seems to be stable, but it is not completely stable in practice.
 
        In the past, ust tokens could remain anchored for several years, and the biggest contributor was the confidence brought by the bull market to investors. However, with the confidence supported by cyber ideas, in 2022, when bitcoin is "lost", ust token also makes no sense to become an exception. After the Luna crash, free psychological counseling calls were placed on major encryption forums abroad, "if you have suicidal impulse, please call the hotline". For zhusu and Sanjian capital, the situation has become a little embarrassing: Terra assets, which previously borrowed $560million for investment, are now worth only $670, a six digit loss overnight. The last tweet of zhusu, a popular Internet user, stayed on June 15: "we are communicating with relevant parties and are fully committed to solving this problem.
 
        ”Then there was no news. In mid June, Celsius, a cryptocurrency lending platform, announced a suspension of withdrawals, resulting in problems in the fund pool; On July 8, voyagerdigital, which lent Sanjian capital about $666million in encrypted assets, also filed for bankruptcy protection in the United States. In addition, a large number of institutions, including FTX, bitmex, binance and so on, have bad debts of Sanjian capital, so they have to pull banners at the door of the office. The resulting extreme panic caused a large number of unrelated "crypto banks" to rush out to "deny the three companies" to get rid of the relationship and appease users. The founders of the world's two largest exchanges even quarreled over this.
 
        The founder of bitmex exchange mentioned in a public article that a large number of "crypto banks" are eager to expand and are full of confidence in the huge asset pool of Sanjian capital, so they have opened up a gap in loan mortgage: not only does Sanjian capital be allowed to take Shanzhai currency with great fluctuations as collateral, but some institutions even acquiesce in repeated mortgage and zero mortgage [4]. Finally, when the deadly bullet was fired into an explosive barrel, the aftershock ignited one detonator after another with the lead wire, and a grand "collapse fireworks show" was staged. In addition to the terra investment of "borrowing chicken to lay eggs", the rest of Sanjian capital's investments are mainly in the two fields of bitcoin and Ethereum.
 
        In the past, three arrow capital used bitcoin to buy the "ETF like fund" GBTC launched by gray trust. According to the information disclosed by relevant media, Sanjian capital once earned double-digit asset growth by this in 2020. Unfortunately, due to the later competition of bitcoin EFT, GBTC began to halve in 2021. Instead of selling directly, Sanjian capital has been waiting for the only remaining possibility of turnover: grayscale trust plans to apply to the SEC (Securities and Exchange Commission of the United States) to convert GBTC into a formal ETF. If passed, the significantly increased liquidity will even give the price a chance to surpass the previous high.
 
        Zhusu, the "waiting party", missed the best stop loss opportunity. It's just that people are unlucky to drink cold water. At the end of June, the SEC rejected this proposal, so angry that grayscale trust directly took the other party to court &mdash& mdash; This means that Sanjian capital will have to wait at least one more year for litigation. Seeing that the debt collectors were about to hit the door, zhusu decided to sell another big asset on hand &mdash& mdash; Eth token directly linked to Ethereum. In July, zhusu was found to be preparing to sell a $35million Singapore mansion. When everyone thought that Sanjian capital was ready to make efforts to repay the debt, the lawyer in charge of the bankruptcy case found that the two founders could not be contacted, and they were suspected to have fled from Singapore.
 
        Now, creditors who thought they would come to a full stop were left with a big question mark. When the story goes all the way here, we will find that the first collapse of the Web3 world is not really "Web3", but more like another repeated rhyme of history. At the end of the subprime mortgage crisis in 2008, a mysterious man named Nakamoto released a white paper entitled "bitcoin: a peer-to-peer e-cash system", and personally excavated the world's first cryptocurrency. This cross era invention has deeply moved a large number of idealists around the world. In their view, the root cause of this disastrous subprime mortgage crisis is the selfish centralized institutions and their countless crimes.
 
        A decentralized currency will solve the subprime mortgage crisis at its root and bring a new economic order. But I don't know when it began. Idealists who once talked about decentralization also combed their hair into an adult look, dressed in Patagonia, and opened their mouth as "what wave has bitcoin risen to?". [9] Success or failure is arbitrage. How does gray-scale GBTC "kill" unjustified institutions such as Sanjian capital and blockfi, and deep tide techflow.
 
        
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